1. Households Below Average Income 23 rd April 2007 Presentation at FRS User Group Meeting By Nick Herbert - DWP

2. Topics to be covered HBAI coverage What does HBAI aim to measure ? Equivalisation SPI adjustment Grossing HBAI publication Typical questions that are asked

3. HBAI coverage Private households in United Kingdom Main data source is - DWP Family Resources Survey Measurement of living standards as determined by the net disposable household income Incomes equivalised and analysed Before and After Housing Costs (BHC and AHC)

4. What does HBAI measure ? HBAI uses household disposable incomes, after adjusting for household composition, as proxy for material living standards Uses OECD equivalisation scales, rather than McClements The baseline year, for absolute low income, is 1998/99 Material deprivation is now reported on

5. Equivalisation Takes into account the size and composition of the household Equivalisation scales take a couple with no children as a reference point Use OECD scales, which are consistent with EU The factors are applied to the data

6. Mean income £427pw Median income £349pw 2.1 million individuals with income above £1000 per week 12 3 456 7 8 9 10 60 per cent median £210pw The income distribution in 2004/05 (BHC)

7. SPI adjustment An adjustment is made to sample cases at the top of the income distribution to correct for volatility in the FRS Uses data from Survey of Personal Incomes (SPI) from HMRC The very rich are assigned income from SPI Adjustment is made separately for pensioners and non-pensioners

8. Grossing Apply factors to the sample data to give estimates which represent overall private household population Control totals are applied, for males and females by age-band, by region Other control totals are number of lone parents, tenure type and Council Tax band

9. HBAI - annual publication HBAI is published annually, in the spring It is a high-profile DWP publication Reports upon the departments child poverty targets It also provides poverty measures for working-age adults and pensioners Provides some inequality measures

10. Customers and queries Main customers; policy colleagues in DWP, HM Treasury, Scottish Executive, academics Typical questions; what is the number of people in low income by region, by ethnic group, by disability status, by number of children Also, of course, get questions on changes over the years

11. Low-income proportions by region and country 2004/05

12. END OF PRESENTATION